1. Field of the Invention
The invention is related to financial analysis and, more particularly to the comparison of pricing charts.
2. Description of the Related Art
Today, multiple markets exist which trade various items of value. Items of value may be commodities such as iron, gold and oil, or securities such as stocks and bonds or various currencies. Furthermore, contracts such as options (contracts to buy or sell an item at certain price) and others may also be traded. Some more innovative markets trade contracts which promise payment upon the occurrence or non-occurrence of a certain predefined event (thus essentially trading “bets”).
Some markets provide detailed information as to the prices of the items traded. Examples of such markets include almost all of the well known financial markets, such as NASDAQ, NYSE, etc.
It is well known that multiple persons, professionals and amateurs alike, attempt to profit from markets by anticipating the future price movements of the traded item. There exist multiple tools, methods and theories used for guessing a future price movement of a traded item. Many of these methods rely on finding a correlation between two or more items. Correlations may be valuable for a variety of reasons, the most apparent being that once a correlation between two items is found, one may anticipate a movement of the price of one of the items based on the price of another related item.
Furthermore, if an investor is interested in a particular item (e.g., a stock), that investor may wish to find other items which are correlated to it. This may be the case because such correlations often show some kind of business relationship between the two items (for example, the stock of a company may be closely correlated to the price of a raw material it uses in its business), and thus the investor may be interested in discovering such relationships in order to learn more about the stock he/she is interested in. Alternatively, the investor may like the price history of the stock and may be looking for other stocks with the same price history to invest in.
A correlation is any relation of the prices of two items over time. Examples of known correlations, are the prices of oil and natural gas, which are believed to follow each other, the prices of stocks and bonds (or, put another way, the yields of bonds and the changes in stock prices) which are believed to be inversely related, the prices of stocks of goods-producing companies and transport companies which are also believed to follow each other, or the price of a commodity and the currency of a country producing that commodity in large volumes.
While there are many known correlations between different pairs or groups of traded items, most of these well known correlations are thoroughly exploited by institutional traders. Therefore it is not easy for most investors to realize profits from relying on these well known correlations. Thus, it may be valuable for an investor to find a correlation which is not so well known.
However, the information provided by present markets is usually overwhelming. It is not practicable for most investors to look over thousands upon thousands of listings to attempt to find a correlation. For example, at the time of this writing the NYSE has more than 2600 listings.
With the rising popularity of investing, providing informational services to investors has become a lucrative business. Currently, various websites provide such informational services and many of these websites are looking for additional services which would differentiate them from the competition and attract more investors.
Another method which investors use to attempt to predict future trading prices of various items is technical analysis. Technical analysis is the practice of attempting to predict a future price of a listing by analyzing the previous price history of that listing. Technical analysts believe that certain shapes of price charts provide clues as to what the price will be in the future. Thus, it may be beneficial for certain investors (for example, technical analysts) to find stock whose price history most closely matches a certain predefined curve.
What is needed is a way to automatically find pairs or groups of correlated traded items. Also, needed is a way to find the traded item or items which are most closely correlated to a particular given traded item. Also needed is a way find a particular traded item whose price history most closely resembles a predefined curve.